Coral Gables, August 06, 2024 – SL FINANCIAL is an actuarial consulting and advisory firm based in Miami, Florida. We are present in Nigeria (West Africa) under GOLDWYNS ACTUARY LLP. We offer complete actuarial solutions in both traditional (re)insurance and alternative risk financing industries. We are here to help insurers and financial institutions to navigate the implementation of IFRS 17, the new standard for insurance contract accounting.

The financial landscape is constantly evolving, and regulatory changes are a key driver of this evolution. One of the most significant regulatory shifts in recent years is the introduction of the International Financial Reporting Standard (IFRS) 17, which fundamentally changes how insurance contracts are reported. As Mauritius embarks on the journey to implement IFRS 17, insights from South Africa's experience offer valuable lessons and guidance.

The Landscape of Insurance in Mauritius

Mauritius, a vibrant island nation with a burgeoning financial services sector, is no stranger to regulatory advancements. The country's insurance sector has grown substantially over the years, driven by both local demand and its strategic position as a gateway to African markets. However, the implementation of IFRS 17 represents a significant challenge for Mauritian insurers, who must now adapt to a new way of recognizing, measuring, and disclosing insurance contracts.

The Challenges of IFRS 17 Implementation

1. Complexity of New Reporting Requirements

IFRS 17 introduces a more complex framework for the recognition and measurement of insurance contracts compared to the previous standard, IFRS 4. Insurers in Mauritius must now calculate the Contractual Service Margin (CSM), a key component that represents the unearned profit for services yet to be provided. This requires a sophisticated understanding of actuarial techniques and financial modeling.

2. Data and Systems Overhaul

Implementing IFRS 17 necessitates a comprehensive overhaul of data management and IT systems. Insurers must collect, process, and store vast amounts of data to meet the new reporting requirements. Due to the substantial workload and the significant investments required, Mauritian insurers have entrusted us with the opportunity to perform the necessary work using our new data analytics tools.

3. The Scarceness of Market Variables and The Transition Process

The scarceness of market variables and the complexity of the transition process present significant challenges to the implementation of IFRS 17. To overcome these hurdles, there is a need in robust data management systems, develop innovative approaches to estimating market variables, and carefully plan their transition process. By addressing these challenges proactively, there will be a transparent, understandable, and realistic analysis of our reports in accordance with the standard.

SL FINANCIAL: Your Trusted Guide to IFRS 17 Implementation, Leveraging Expertise, Delivering Results

SL FINANCIAL, with extensive experience guiding Mauritian insurers through IFRS 17 implementation, is uniquely positioned to support your compliance journey. South Africa's pioneering role in Africa further strengthens our capabilities. We were recently chosen by a major Mauritian insurance company with subsidiaries across Africa to navigate their IFRS 17 transition. This project, combined with our broader work in Mauritius, allows us to offer invaluable insights on key aspects of IFRS 17 implementation:

• Comprehensive Actuarial Analysis: Meeting IFRS 17 requirements demands detailed assumptions, including discount rates, expenses, mortality rates, and discontinuance rates. Our team provides thorough actuarial analysis and documentation to ensure compliance.

• Granular Data for Accurate Valuations: Accurate liability valuation hinges on detailed cash flow projections, ideally segmented by cohort (groups with similar characteristics). SL Financial can assist you with this critical process.

• Risk Management and Adjustment Expertise: The calculation of Risk Adjustment (RA) necessitates a deep understanding of risk within your insurance portfolio. SL Financial leverages its expertise in risk management practices to guide you through this step. 

• Smooth Transition Planning: The shift from IFRS 4 to IFRS 17 involves using different valuation assumptions, such as mortality tables and discount rates. We understand the need for detailed and company-specific actuarial assumptions under IFRS 17. In addition, we can share valuable insights on the transition approaches successfully employed in South Africa.

Some lessons from our South Africa | Mauritius' IFRS 17 Journey

Our South Africa & Mauritius’ experience provided valuable insights in our implementation journey:

• The need for detailed assumptions, including discount rates, expenses, mortality, and discontinuance rates, underscores the importance of comprehensive actuarial analysis and documentation under IFRS 17.

• The need for detailed cash flow projections, ideally by cohort, underscores the importance of granular data and analysis in liability valuation.

• The calculation of the Risk Adjustment (RA) involves a thorough analysis, this highlights the need for robust risk management practices and a deep understanding of the underlying risks in the insurance portfolio.

• The transition from IFRS 4 to IFRS 17 involves different valuation assumptions, such as mortality tables and discount rates. These assumptions have a significant impact on the valuation of liabilities and highlight the need for more detailed and company-specific actuarial assumptions under IFRS 17 and a good comprehension of the approaches they used for the transition.

How SL FINANCIAL Can Help You Implement IFRS 17

At SL FINANCIAL, we offer a comprehensive suite of IFRS 17 advisory services:

• Data Management: We evaluate data quality and completeness, support data migration to new systems, and ensure data accuracy and integrity.
• Actuarial Modeling: We build and validate actuarial models for IFRS 17 calculations, including Best Estimate Liabilities (BEL), Risk Adjustment (RA), and Contractual Service Margin (CSM). We also assist in setting and reviewing actuarial assumptions.
• Reporting Framework Development: We define the structure and format for IFRS 17 financial statements and ensure full compliance with disclosure requirements.

Embrace the Change, Ensure Compliance

With SL FINANCIAL as your partner, you can navigate the complexities of IFRS 17 with confidence. Contact us today to discuss your specific needs and ensure a smooth transition to the new standard.

For any question or media inquiry, please visit our website at www.sl-financial.com or contact our team at that ceo@sl-financial.com.